Apple sues Corellium, which lets users run iOS firmware in a web browser
cultofmac.com
cultofmac.com
This is just my opinion/conjecture, but I would assume that Apple just doesn't like the idea of the core product. I personally don't understand why a company that bases itself on morals would find issue with a tool like this. With introduction of things like the T2 chips in their computer product line, I would assume they have a real problem with people running their software on anything that's not an Apple branded device.
But to answer your question, It is actually running stock Apple iOS firmware on a ARM hypervisor which Corellium has created and they are relaying the screen output onto the web from the hypervisor.
You can think of Corellium as like a enterprise-grade Docker, but for iOS and Android apps.